Mayor Mamdani and Council Speaker Julie Menin Tuesday announced a delay for the city’s $127 billion budget while making a joint push for Gov. Hochul to reduce a state tax credit that often helps the wealthy, a change the officials said would bring New York City about a billion dollars in additional revenue.
Mamdani and Menin want Hochul to reduce the Pass-through-entity tax, or PTET, from 100% to 75%, which they framed as a “modest” reduction that would impact mostly millionaires. The state senate and assembly both have included the PTET reduction in their One-House budget proposals, but Gov. Hochul slapped down the idea on Tuesday.
Their announcement was a departure from what has been the more typically adversarial relationship between Mamdani and Menin, who stand on different ends of the Democratic Party spectrum and have developed mostly antagonistic positions in the city’s budget process.
The mayor framed the credit as a “tax cut for the rich,” pointing out that over 95% of those who benefit from the credit make more than $1 million annually. PTET allows business owners to bypass federal limits on tax deductions.
“We need new revenue, and we need a structural reset in our relationship with the state,” Mamdani said at the City Hall rotunda announcement. “That is the only way to meet our legal obligation to pass a balanced budget, and to do so without imposing a financial burden onto the backs of working people.”
The mayor has warned of a $5.4 billion budget gap currently faced by the city, and he has been pushing Albany to implement several revenue enhancements, including his core proposals of increasing taxes on the city’s wealthiest residents and corporations.
To fill that budget gap, Mamdani has put the pressure on Albany to shell out more money for the city — making the state budget’s nearly month-long delay a problem for the city’s own budget plans.
To give the city time to adjust, Mamdani and Menin announced they agreed to push the deadline for Mamdani to deliver his executive budget, originally Friday, to May 12. The final city budget is due at the end of June, as the new fiscal year begins on July 1.
Hochul, for her part, has called Mamdani’s income and corporation tax hikes a nonstarter, and added the PTET proposal into the no-go list on Tuesday. The governor has forked over billions for childcare funding and agreed to a pied-a-terre tax on second homes in the five boroughs.
“It’s not happening. We’re not changing PTET,” Hochul said at a separate availability in Albany, adding that she saw a reduction of the tax credit as equivalent to a personal income tax increase.
Menin’s advocacy for the PTET reduction also marked a slight change from the Council’s prior messaging around the budget, including in an April budget plan that advocated for balancing the city’s books mostly through savings.
But on Tuesday, Menin said her push for the tax change was “not a shift at all.”
“It’s an iteration that we need additional help,” the speaker said, adding that the PTET change was included in the Council’s budget response, along with other revenue raisers like adding more speed cameras. “… We are being asked again and again in the city to take care of these items, and we really need to put the city on an equal footing.”
In their budget proposal, released April 1, the Council more cautiously put forward as an option that could be pursed “after exhausting all other efforts to identify efficiencies within the existing budget.”
While the tax credit reduction represents a rare area of agreement on the issue of taxation, Mamdani and Menin weren’t totally aligned.
Menin, when pressed on her willingness to implement a tax on the wealthy, said the change should only be done on a “temporary basis.”
“We’re not talking about doing it long term,” Menin said. “We’re talking about a short-term solution to this problem.”
The mayor did not respond to a question on whether he agreed with the speaker that the credit reduction should be temporary. Asked for clarification on this, his spokesperson, Dora Pekec, emphasized that the administration is “looking for structural solutions to the structural challenges facing our city.”